In an online meeting held on August 1, OPEC+ ministers decided to maintain their existing oil production policy. This policy includes a gradual reversal of some production cuts beginning in October, according to a report by Rystad Energy‘s Senior Analyst, Svetlana Tretyakova.
Tretyakova noted that the policy could be adjusted or halted if necessary. This update was shared with Rigzone by the Rystad team.
In a separate report to Rigzone, Bjarne Schieldrop, Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), mentioned that the OPEC+ Joint Ministerial Monitoring Committee (JMMC) did not introduce any new recommendations after their August 1 meeting.
Schieldrop confirmed that the planned production increase of 2.2 million barrels per day, scheduled to gradually begin in Q4 2024 and continue until Q3 2025, remains in place. However, he emphasized that this increase is contingent on market conditions. If conditions are not favorable, the increase may not occur.
On August 1, OPEC posted a statement on its website, indicating that the JMMC reviewed crude oil production data for May and June 2024. The committee noted high compliance with the Declaration of Cooperation (DoC) by OPEC and non-OPEC countries.
The statement highlighted that Iraq, Kazakhstan, and Russia had assured their commitment to achieving full conformity and had submitted compensation plans for overproduced volumes since January 2024.
The statement also noted that the countries involved in the June 2, 2024, Riyadh meeting, along with Oman, reiterated that the gradual phase-out of voluntary production cuts could be paused or reversed based on market conditions. These countries had previously extended the voluntary reduction of oil production by 2.2 million barrels per day until the end of September 2024 and planned for this reduction to be phased out monthly until September 2025.
The committee will continue to monitor compliance with production adjustments decided at the June 2, 2024, OPEC and Non-OPEC Ministerial Meeting, including additional voluntary production adjustments by some countries. It will also assess market conditions closely.
The JMMC has the authority to call additional meetings or request an OPEC and non-OPEC Ministerial Meeting, as outlined in the June 2 meeting. The next JMMC meeting is scheduled for October 2, and the next OPEC and non-OPEC Ministerial Meeting will take place on December 1.
In a market analysis sent to Rigzone on August 1, Hani Abuagla, Senior Market Analyst at XTB MENA, predicted that if OPEC+ continues to focus on increasing production without signs of recovery from China, oil prices might permanently drop to around $70-80 per barrel. However, he expects increased volatility and prices to remain around $80 per barrel in the coming weeks.
A statement from OPEC on July 24 confirmed that the OPEC Secretariat had received compensation plans from Iraq, Kazakhstan, and Russia for overproduced volumes in the first half of 2024. The June 2 meeting emphasized the importance of adhering to full compliance and the compensation mechanism.
According to the statement, compensation plans received included about 1.184 million barrels per day from Iraq, 620,000 barrels per day from Kazakhstan, and 480,000 barrels per day from Russia, based on independent assessments approved in the Declaration of Cooperation.